Bulletin: AL2015002

The Alabama Department of Insurance has approved new ALTA forms for use in Alabama. The effective date for these new ALTA forms is March 27, 2015. Three revised ALTA policy forms and seventeen ALTA endorsements were approved.

I. ALTA POLICY FORMS

ALTA Homeowner’s Policy of Title Insurance (12-02-13)

The ALTA Homeowner’s Policy of Title Insurance (12/02/13) is designed to incorporate the changes of the 2006 Owner’s Policy and improve the title insurance coverage given to the insured. The only changes in the 2013 Policy include:

2. The following exclusions from coverage: (8) Contamination, explosion, fire, flooding, vibration, fracturing, earthquake, or subsidence; and (9) Negligence by a person or an Entity exercising a right to extract or develop minerals, water, or any other substances was added.

ALTA Expanded Coverage Residential Loan Policy (12/02/13)

The ALTA Expanded Coverage Residential Loan Policy for a One-To Four Family Residence (12/02/13) is designed to incorporate the changes of the 2006 Loan Policy and improve the title insurance coverage given to the insured. The only changes in the policy include:

1. The following exclusions from coverage: (10) Contamination, explosion, fire, flooding, vibration, fracturing, earthquake, or subsidence; and (11) Negligence by a person or an Entity exercising a right to extract or develop minerals, water, or any other substances was added.

The ALTA Short Form Residential Limited Coverage Junior Loan Policy is the abbreviated short form version of the ALTA Residential Limited Coverage Junior Loan Policy (08-01-12) already filed and which includes the Insuring Provisions, Exclusions from Coverage, Conditions and Schedule. The ALTA Residential Limited Coverage Junior Loan Policy insures against loss or damage incurred by reason of: (1) the Grantee not being the named grantee on the last recorded deed; (2) the Land not being the same as the land described in the last recorded deed; (3) any Monetary Liens recorded in the Public Records; and (4) any ad valorem taxes or assessments that appear in the tax records. This policy does not insure the validity of the insured's mortgage and it does not insure that the Grantee (who will generally be the mortgagor) owns the land. It does provide defense costs as stated and does insure a later owner of the debt secured by the insured's mortgage. This form is issued before the Junior Mortgage is executed; it is similar to a commitment to insure. The addendum to the Short Form Residential Limited Coverage Loan Policy would be attached to the policy to show any special exceptions on a case by case basis, after the examination of title, such as liens or mortgages or deeds of record. These specialized items could change from each piece of property so the addendum allows for reference to these title conditions as they relate to each specific property.

II. ALTA ENDORSEMENTS

The American Land Title Association adopted for use some new endorsements as of April 2, 2013, and December 2, 2013, which are to be used in connection with the 2006 policies already in use. These endorsements have been designed to follow the same concepts as the 2006 ALTA Policies, and to better coordinate with the 2006 ALTA Loan and Owner’s Policies already approved for use in the state.

The format of these new forms should aid in their understanding and interpretation as they have been written to clarify terms and reorganize the content of the language for easier understanding by the consumer. These newly adopted endorsements are: ALTA Endorsement 9.6-06; 9.9-06; 9.10-06; ALTA 11.2-06; ALTA 12-06; ALTA 12.1-06; ALTA 28.2-06; ALTA 32.1-06; ALTA 32.2-06; ALTA 39-06; ALTA 41-06; ALTA 41.1-06; ALTA 41.2-06; ALTA 41.3-06; ALTA 42-06; ALTA 43-06 and ALTA 44-06.

ALTA Endorsement 9.6-06 Private Rights - Loan Policy (04-02-13)

This endorsement to a Loan policy insures against enforcement of a Private Right in a Covenant affecting the Title at Date of Policy if it: (a) results in the invalidity, unenforceability or lack of priority of the lien of the Insured Mortgage; or (b) causes a loss of the Insured’s Title acquired in satisfaction or partial satisfaction of the Indebtedness.

ALTA Endorsement 9.9-06 Private Right-Owner’s Policy (04-02-13)

This endorsement to an Owner’s Policy insures against enforcement of a Private Right if a Covenant affecting the Title at Date of Policy based on a transfer of Title on or before Date of Policy causes a loss of the Insured’s Title.

This endorsement to a Loan Policy insures against violations of covenants, encroachments on the Land from improvements, and damage to improvements by reason of mineral development.

ALTA Endorsement 12-06 (Aggregation - Loan Policy) (04-02-13)

This endorsement is also called the "tie-in," "cluster," or "spreader" endorsement. It is issued with a Loan Policy in many states on commercial transactions. The Endorsement aggregates the Amount of Insurance on each Loan Policy listed in the endorsement. This endorsement to multiple Loan Policies results in one liability for all policies; it creates the same result as one Policy covering multiple sites. This endorsement is not designed to be issued with an Owner's Policy.

This Aggregation Endorsement includes a “State Limit” in section 3b, which provides that if the Land is located in one of the states identified within the subsection, then the Aggregate Amount of Insurance is restricted. Additionally, the extent of liability of the Company for loss or damage under a policy containing this endorsement shall not exceed the Aggregate Amount of Insurance for the State where the Land is located. This endorsement is not designed to be issued with an Owner's Policy.

For the purposes of this endorsement, “Improvement” means each improvement on the Land or adjoining land at Date of Policy. This endorsement insures against loss or damage sustained by the Insured by reason of: (a) an encroachment of any Improvement located on the Land onto adjoining land or onto that portion of the Land subject to an easement, unless an exception in Schedule B of the policy identifies the encroachment; (b) an encroachment of any Improvement located on adjoining land onto the Land at Date of Policy, unless an exception in Schedule B of the policy identifies the encroachment; (c) enforced removal of any Improvement located on the Land as a result of an encroachment by the Improvement onto any portion of the Land subject to any easement, in the event that the owners of the easement shall, for the purpose of exercising the right of use or maintenance of the easement, compel removal or relocation of the encroaching Improvement; or (d) enforced removal of any improvement located on the Land that encroaches onto adjoining land.

This endorsement insures construction loan advances only to the extent that direct payment to the Mechanic's Lien claimant has been made by the Company or by the Insured with the Company's written approval. It does not insure against loss or damage by reason of any mechanic’s lien arising from services, labor, material or equipment: (a) furnished after Date of Coverage; or (b) to the extent that a Mechanic’s Lien claimant was not directly paid by the Company or by the Insured with the Company’s written approval.

This endorsement insures construction loan advances only to the extent that direct payment to the Mechanic’s Lien claimant has been made by the Insured or on the Insured’s behalf on or before Date of Coverage. It does not insure against loss or damage by reason of any mechanic’s lien arising from services, labor, material or equipment: (a) furnished after Date of Coverage; or (b) to the extent that the Mechanic’s Lien claimant was not directly paid by the Insured or on the Insured’s behalf. ALTA 32.2-06 does not require that the Company or its agent will be involved in disbursement of funds.

ALTA Endorsement 39-06 (Policy Authentication) (04-02-13)

This endorsement insures that the Company will not deny liability under the policy or any endorsements issued with the policy solely on the grounds that the policy or endorsements were issued electronically or lack signatures in accordance with the Conditions.

This endorsement insures against loss or damage sustained by the Insured by reason of: (a) The invalidity or unenforceability of the lien of the Insured Mortgage upon the Title as a result of the Modification; (b) The lack of priority of the lien of the Insured Mortgage over defects in or liens or encumbrances on the Title, (with exceptions, if any); (c) The failure of matters to be subordinate to the lien of the Insured Mortgage, (matters to be insured as subordinate should be specified, if any).

ALTA Endorsement 41-06 (Water - Buildings) (12-02-13)

This endorsement insures against loss or damage sustained by the Insured by reason of the enforced removal or alteration of any Improvement resulting from the future exercise of any right existing at Date of Policy to use the surface of the Land for the extraction or development of water excepted from the description of the Land or excepted in Schedule B.

ALTA Endorsement 41.1-06 (Water - Improvements) (12-02-13)

This endorsement insures against loss or damage sustained by the Insured by reason of the enforced removal or alteration of any Improvement, resulting from the future exercise of any right existing at Date of Policy to use the surface of the Land for the extraction or development of water excepted from the description of the Land or excepted in Schedule B.

ALTA Endorsement 41.2-06 (Water - Described Improvements) (12-02-13)

This endorsement insures against loss or damage sustained by the Insured by reason of the enforced removal or alteration of any Improvement resulting from the future exercise of any right existing at Date of Policy to use the surface of the Land for the extraction or development of water excepted from the description of the Land or excepted in Schedule B.

ALTA Endorsement 41.3-06 (Water - Land Under Development) (12-02-13)

This endorsement insures against loss or damage sustained by the Insured by reason of the enforced removal or alteration of an Improvement or a Future Improvement, resulting from the future exercise of any right existing at Date of Policy to use the surface of the Land for the extraction or development of water excepted from the description of the Land or excepted in Schedule B.

ALTA Endorsement 42-06 (Commercial Lender Group) (12-02-13)

This endorsement insures against loss or damage sustained by the Insured by reason of: (a) The invalidity or unenforceability of the lien of the Insured Mortgage caused by transfers after the Date of Policy of portions of the Indebtedness by the Participants; (b) Loss of priority of the lien of the Insured Mortgage, which loss of priority is caused by transfers after the Date of Policy of portions of the Indebtedness by the Participants.

ALTA Endorsement 43-06 (Anti-Taint) (12-02-13)

This endorsement insures against loss or damage sustained by the Insured by reason of the loss of priority of the lien of the Insured Mortgage, as security for the amount of the Indebtedness advanced as the Term Loan, resulting from reductions and subsequent increases of the outstanding principal amount of the Indebtedness payable as the Revolving Credit Loan.

ALTA Endorsement 44-06 (Insured Mortgage Recording) (12-02-13)

This endorsement insures against loss or damage sustained by the Insured by reason of the failure of the Insured Mortgage to have been recorded in the Public Records as set forth in Section 3 of the Endorsement.

If you are using AIM+, please contact PropertyInfo Customer Care to get the forms and the rates reflected for the endorsements from the new rate manual that was effective 01/09/15 implemented to your AIM+ system. If you are not an AIM+ user, please contact your software provider to secure implementation of the forms and rates into your production system.

If you have any questions relating to this or other bulletins, please contact the Alabama State Office for assistance.

For on-line viewing of this and other bulletins, please log onto www.vuwriter.com.

THIS BULLETIN IS FURNISHED TO INFORM YOU OF CURRENT DEVELOPMENTS. AS A REMINDER, YOU ARE CHARGED WITH KNOWLEDGE OF THE CONTENT ON VIRTUAL UNDERWRITER AS IT EXISTS FROM TIME TO TIME AS IT APPLIES TO YOU, AS WELL AS ANY OTHER INSTRUCTIONS. OUR UNDERWRITING AGREEMENTS DO NOT AUTHORIZE OUR ISSUING AGENTS TO ENGAGE IN SETTLEMENTS OR CLOSINGS ON BEHALF OF STEWART TITLE GUARANTY COMPANY. THIS BULLETIN IS NOT INTENDED TO DIRECT YOUR ESCROW OR SETTLEMENT PRACTICES OR TO CHANGE PROVISIONS OF APPLICABLE UNDERWRITING AGREEMENTS. CONFIDENTIAL, PROPRIETARY, OR NONPUBLIC PERSONAL INFORMATION SHOULD NEVER BE SHARED OR DISSEMINATED EXCEPT AS ALLOWED BY LAW. IF APPLICABLE STATE LAW OR REGULATION IMPOSES ADDITIONAL REQUIREMENTS, YOU SHOULD CONTINUE TO COMPLY WITH THOSE REQUIREMENTS.